Garfield Company manufactures a popular brand of dog repellant known as DogGone It, which it sells in gallon-size bottles with a spray attachment. The majority of Garfield’s business comes from orders placed by homeowners who are trying to keep neighborhood dogs out of their yards. Garfield’s operating information for the first six months of the year follows:

Required:
3. Using the high-low method, calculate Garfield’s total fixed operating costs and variable operating cost per bottle. (Do not round your intermediate calculations. Round your variable cost per unit answer to 2 decimal places and fixed cost answer to the nearest whole number.)



4. Perform a least-squares regression analysis on Garfield’s data. (Use Microsoft Excel or a statistical package to find the coefficients using least-squares regression. Round your answers to 3 decimal places.)

5. Determine how well this regression analysis explains the data. (Round you regression statistics to three decimal places and your percentage answer to the nearest whole number.)

6. Using the regression output, create a linear cost equation (y = a + bx) for estimating Garfield’s operating costs. (Round your answers to 3 decimal places.)

Laser Impressions Inc. manufactures color laser printers. Model J20 presently sells for $425 and has a product cost of $340, as follows:

It is estimated that the competitive selling price for color laser printers of this type will drop to $400 next year. Laser Impressions has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost-reduction ideas:

1. Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit.
2. Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $8 per unit.
3. Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 42% of the factory overhead are related to running injection molding machines.

The direct labor rate is $25 per hour.

a. Determine the target cost for Model J20, assuming that the historical markup on product cost and selling price are maintained. Round your final answer to two decimal places.
$ per unit

b. Determine the required cost reduction. Enter as a positive number. Round your final answer to two decimal places.
$ per unit

c. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Enter all amounts as positive numbers. Do not round interim calculations but round your final answers to two decimal places.

Garfield Company manufactures a popular brand of dog repellant known as DogGone It, which it sells in gallon-size bottles with a spray attachment. The majority of Garfield’s business comes from orders placed by homeowners who are trying to keep neighborhood dogs out of their yards. Garfield’s operating information for the first six months of the year follows:

Required:
3. Using the high-low method, calculate Garfield’s total fixed operating costs and variable operating cost per bottle. (Do not round your intermediate calculations. Round your variable cost per unit answer to 2 decimal places and fixed cost answer to the nearest whole number.)

Variable cost per unit: 8.83

fixed cost : 1420

4. Perform a least-squares regression analysis on Garfield’s data. (Use Microsoft Excel or a statistical package to find the coefficients using least-squares regression. Round your answers to 3 decimal places.)

coefficients

intercept:

X variable 1:

5. Determine how well this regression analysis explains the data. (Round you regression statistics to three decimal places and your percentage answer to the nearest whole number.)

6. Using the regression output, create a linear cost equation (y = a + bx) for estimating Garfield’s operating costs. (Round your answers to 3 decimal places.)

total cost = + (Number of bottles)

Laser Cast, Inc., manufactures color laser printers. Model J20 presently sells for $375 and has a total product cost of $300, as follows:

It is estimated that the competitive selling price for color laser printers of this type will drop to $360 next year. Laser Cast has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost reduction ideas:

Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit.

Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $8 per unit.

Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 40% of the factory overhead are related to running injection molding machines.

The direct labor rate is $25 per hour.

a. Determine the target cost for Model J20 assuming that the historical markup on product cost and selling price is maintained. Round your final answer to two decimal places.
$

b. Determine the required cost reduction. Enter as a positive number. Round your final answer to two decimal places.
$

c. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Enter all amounts as positive numbers. Do not round interim calculations but round your final answers to two decimal places.

Target Costing

Laser Impressions, Inc., manufactures color laser printers. Model J20 presently sells for $175 and has a total product cost of $140, as follows:

It is estimated that the competitive selling price for color laser printers of this type will drop to $170 next year. Laser Impressions has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost-reduction ideas:

Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit.

Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $4 per unit.

Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 45% of the factory overhead are related to running injection molding machines.

The direct labor rate is $13 per hour.

a. Determine the target cost for Model J20 assuming that the historical markup on product cost and selling price are maintained. Round your final answer to two decimal places.
$

b. Determine the required cost reduction. Enter as a positive number. Round your final answer to two decimal places.
$

c. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Enter all amounts as positive numbers. Do not round interim calculations but round your final answers to two decimal places.

Laser Cast, Inc., manufactures color laser printers. Model J20 presently sells for $150 and has a total product cost of $120, as follows:

It is estimated that the competitive selling price for color laser printers of this type will drop to $140 next year. Laser Cast has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost reduction ideas:

Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit.

Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $3 per unit.

Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 40% of the factory overhead are related to running injection molding machines.

The direct labor rate is $8 per hour.

a. Determine the target cost for Model J20 assuming that the historical markup on product cost and selling price is maintained. Round your final answer to two decimal places.
$

b. Determine the required cost reduction. Enter as a positive number. Round your final answer to two decimal places.
$

c. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Enter all amounts as positive numbers. Do not round interim calculations but round your final answers to two decimal places.

Feedback

Target Costing

Laser Cast, Inc., manufactures color laser printers. Model J20 presently sells for $500 and has a total product cost of $400, as follows:

It is estimated that the competitive selling price for color laser printers of this type will drop to $480 next year. Laser Cast has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost-reduction ideas:

Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit.

Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $10 per unit.

Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 42% of the factory overhead are related to running injection molding machines.

The direct labor rate is $34 per hour.

a. Determine the target cost for Model J20 assuming that the historical markup on product cost and selling price are maintained. Round your final answer to two decimal places.
$

b. Determine the required cost reduction. Enter as a positive number. Round your final answer to two decimal places.
$

c. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Enter all amounts as positive numbers. Do not round interim calculations but round your final answers to two decimal places.

Target Costing

Laser Impressions, Inc., manufactures color laser printers. Model J20 presently sells for $575 and has a total product cost of $460, as follows:

It is estimated that the competitive selling price for color laser printers of this type will drop to $550 next year. Laser Impressions has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost reduction ideas:

1. Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit.
2. Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $12 per unit.
3. Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 45% of the factory overhead are related to running injection molding machines.

The direct labor rate is $38 per hour.

a. Determine the target cost for Model J20 assuming that the historical markup on product cost and selling price is maintained. Round your final answer to two decimal places.
$

b. Determine the required cost reduction. Enter as a positive number. Round your final answer to two decimal places.
$

c. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Enter all amounts as positive numbers. Do not round interim calculations but round your final answers to two decimal places.

Target Costing

Laser Cast, Inc., manufactures color laser printers. Model J20 presently sells for $525 and has a total product cost of $420, as follows:

It is estimated that the competitive selling price for color laser printers of this type will drop to $500 next year. Laser Cast has established a target cost to maintain its historical markup percentage on product cost. Engineers have provided the following cost reduction ideas:

1. Purchase a plastic printer cover with snap-on assembly, rather than with screws. This will reduce the amount of direct labor by 9 minutes per unit.
2. Add an inspection step that will add six minutes per unit of direct labor but reduce the materials cost by $11 per unit.
3. Decrease the cycle time of the injection molding machine from four minutes to three minutes per part. Thirty percent of the direct labor and 42% of the factory overhead are related to running injection molding machines.

The direct labor rate is $34 per hour.

a. Determine the target cost for Model J20 assuming that the historical markup on product cost and selling price is maintained. Round your final answer to two decimal places.
$

b. Determine the required cost reduction. Enter as a positive number. Round your final answer to two decimal places.
$

c. Evaluate the three engineering improvements together to determine if the required cost reduction (drift) can be achieved. Enter all amounts as positive numbers. Do not round interim calculations but round your final answers to two decimal places.

Try SpiritTry Spirit

Calendars imprints calendars with college names. The company has fixed expenses of

$ 1 comma 095 comma 000$1,095,000

each month plus variable expenses of

$ 6.50$6.50

per carton of calendars. Of the variable​ expense,

6868​%

is cost of goods​ sold, while the remaining

3232​%

relates to variable operating expenses. The company sells each carton of calendars for

$ 16.50$16.50.

Read the requirements

LOADING...

.

Requirement 1. Compute the number of cartons of calendars that

Try SpiritTry Spirit

Calendars must sell each month to breakeven.  

Begin by determining the basic income statement equation.

Using the basic income statement equation you determined above solve for the number of cartons to break even.

Requirement 2. Compute the dollar amount of monthly sales

Try SpiritTry Spirit

Calendars needs in order to earn

$ 308 comma 000$308,000

in operating income.  

Begin by determining the formula.

​(Round the contribution margin ratio to two decimal​ places.)

Requirement 3. Prepare the​ company's contribution margin income statement for June for sales of

495 comma 000495,000

cartons of calendars.

Requirement 4. What is​ June's margin of safety​ (in dollars)? What is the operating leverage factor at this level of​ sales?

Begin by determining the formula.

What is the operating leverage factor at this level of​ sales? Begin by determining the formula.

​(Round the operating leverage factor to three decimal​ places.)

Requirement 5. By what percentage will operating income change if​ July's sales volume is

1414​%

​higher? Prove your answer. ​(Round the percentage to two decimal​ places.)

Prove your answer. ​(Round the percentage to two decimal​ places.)